Thanks for help! Questions 7 and 8 refer to the following information: The follo

Question

Thanks for help!

Questions 7 and 8 refer to the following information: The following information is for X Company's two products, A and B, last year: Sales Total variable costs Total fixed costs Profit Product A $85,240 49,439 32,430 $3,371 ProductB $92,610 52,788 71,630 $-31,808 Because of the reported loss for Product B, X Company is considering dropping it. Further analysis reveals that $7,970 of Product A's fixed costs and $25,440 of Product B's fixed costs are common costs that the company allocates to the two products 7. If X Company drops Product B, company profits will change by Submit Answer Tries 0/5 8. Assume that sales of Product A can be increased by $15,500 if Product B is dropped. What will be the effect of this increase on company profits? Submit Answer Tries 0/5

Explanation / Answer

7. Company profit will change from -$28,437 to -$22,069.

8. Company profit will increase from -$22,069 to -$15,559

Company's current profit 3371-31808 -28437 If X Company drops Product B, company profit will be Profit of Product A 3371 Common fixed cost allocated to Product B 25440 company profit -22069

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